Module Description:
Ubiquity's Sunil Nagaraj lays out (1) the role of a startup or nonprofit board, (2) what separates good vs. bad board members, and (3) the most common profiles of AMAZING board members.
Full Transcript:
- Welcome everyone to our Ubiquity University session on how to be an amazing board member. Ubiquity Ventures is a seed stage venture capital firm investing in software beyond the screen. That means we back entrepreneurs who are using software to solve real world physical problems far beyond the reach of traditional computers and smartphones. We're eager to talk with you, but in today's session, we'll talk about how to be an amazing board member for those individuals who are just joining a board or who wanna level up their board membership, whether that be in a startup or a nonprofit context.
For the agenda today, we'll talk about four items. First, what is a board? What should boards do and not do? What makes a board member good or bad? What's common amongst them? And then finally, we'll conclude with what I view as pretty typical board member profiles. Now, there is a reason I care about this so much. My own startup, 2009 to 2011, when I moved out to Silicon Valley, I had a board. I didn't know what I was doing running this board. I didn't know what was common. I didn't know what board members were supposed to do, myself included. As founder, CEO, I was on the board. So it was an issue that I struggled with and I wish I had more context. Part of the reason I'm creating this module. Another element is as a venture capitalist, I'm approaching 15 years now, I've been part of 1,000, this was a few years ago, 1,000 board meetings. And so I've seen a lot of different situations play out, for better or for worse. I wrote this blog post here at the Ubiquity Blog at UBQT.vc, which you can take a look. I compare playing songs on an instrument and how you get better over time with being in more and more board meetings. I think there's very similar phases. But this is another reason I care tremendously, and I've been part of many nonprofit boards along the way. So this is informed by all of these different roles on boards and what I've seen work well, what I've seen not work well. Let's talk about what a board is. It's not obvious at the outset. People throw the word around a lot. Think with anything in life, if you have a goal, you're trying to accomplish something, you're trying to increase blood donations, you're trying to launch a new dating app, like I did in the case of Triangulate. You start with a goal and you start to realize there are people that matter to this goal. These might be investors, they might be donors, they might be constituents. But you align these folks around a goal and pretty quickly you realize that you need folks dedicated full-time to this goal. So you build an organization and you need a leader for that organization. So now that you have the CEO, the question becomes, who's in charge of the CEO if the CEO's in charge? In charge is a funny word to use here, but who selects the CEO? And that's where the board of directors comes into play. Now, the board is actually selected by the investors, the donors, the stakeholders. So the board is a little bit like a small council. You can imagine a long time ago having a council of the folks who've been around the block, they've seen a lot of different things, and they select the CEO and then the CEO runs the organization. So the CEO does have accountability to the board. The board does have accountability to the larger group of investors, similar to our US Democracy House, a representative democracy. We elect people who then do the hard work of policy decisions, the research, and then go through the steps to legislation. Here, the investors, donors, constituents select a board, and then the board goes to extra trouble to make sure that they are running things with regard to setting the organization on the right path.
So let's explain exactly what boards do. So I think about this in three components. The good, the bad, and the ugly. And so what I think boards should do, first and foremost, is represent the constituents, right? There might be hundreds or thousands or millions of constituents. So the first way that the board does this is, arguably its most important role, hiring and firing the CEO, selecting the leader for the organization to execute that vision. Furthermore, throughout time, the board will provide checks and balances. They'll serve as a fiduciary for the underlying shareholders. So they're representing everyone's interest. This is a pretty important part of the puzzle, as board members are not supposed to speak for themselves or vote for themselves in sole motivation. They're on the board to represent all shareholders at all times. The next piece is once a board gets going and the CEO is selected, the board is trying to advise the CEO, board members are often involved in other things, other organizations, other board memberships. So they can provide best practices in benchmarking. In this other startup, I've seen this work, maybe it would work for this company. In this other nonprofit, here are two things we did for donor engagement. Maybe it would work here, well here. So again, you're pushing and pulling on the CEO, all with that shared view of reaching that goal that the organization was founded for. Finally, the thing that I'll highlight is boards don't necessarily have to provide the capital, but they need to help to identify capital. In almost every organization, it's either identifying investors or donors, being an investor, being a donor. There's this expression in nonprofit world of being a, having a give or get board, which is, you don't have to donate, but you need to be able to marshal that amount of resources, get the money by fundraising for it. But capital is usually required to get an organization going and keep it going. And so these are the three components. Now, this second column, boards don't need to, I think I called this the bad at the beginning of the slide, but really what I mean is, I want to take some pressure off. If you're joining a board or serving on a board, there's certain things you don't have to do. I don't want you to be burdened with the idea of needing to have brilliant ideas. I was talking to a few venture backed CEOs earlier today about this module, and they said, yeah, actually, it's better if they don't. I don't need more product ideas. That's the last thing I want from my board. If you're part of a high tech innovative startup board, that's not your role. You can throw out some, but don't feel pressured. Don't feel pressured that you need to know how to be CEO, that you have to be able to do this job. It's pretty different than a typical organization, where you're an engineer and then you move up and you become a senior engineer. So you need to know how to do the junior engineer's job. This is totally different as a board role. You're there providing a different function. An important piece of the puzzle is that you don't always agree with the CEO, that you're not just a pushover or rubber stamping everything that's happening. This is part of your duty. Your formal duty is to think through everything going on that is reported to you and make sure it passes the sniff test. And you also, like I said earlier, don't actually have to have money to be on a board. A lot of boards, nonprofits and startups, startups will select an independent board member, and that is not for the capital, that's for the advice, input, network, et cetera. The last piece here is what I want to call out that board members should not. This is based on places I've seen things go wrong, where board members often want to try to run the organization. Most disruptively, create surprises. We'll go into this a bit more in just a second, but I hope I'm conveying here that your role as a board member is really to provide governance, is really to oversee things, and help out where you can, but you don't have to be super involved in the day-to-day operations. In fact, that can get pretty sticky. So with that in mind, let's use this idea of a good and bad board member to separate things.
So a bad board member, again, informed by what I've seen with my own two eyes, I sometimes refer to this as a tornado. Someone comes in out of the blue, you didn't see 'em coming, whirlwind, rips apart everything, and then runs out and you don't see 'em again for a few months. This tornado happens quite a bit and it's very disruptive, tactically and emotionally. In a board meeting, I've seen board members chime in out of context with kind of off the wall ideas that aren't relevant to the current discussion because they were distracted checking their email or something else like that. So bad board members are sort of off topic. A good board member here would be somebody who's well prepared in advance, and what that specifically means, you'll be ahead of 90% of board members if you review the board materials that are sent to you far in advance. Often board materials, board meeting materials, are sent a day in advance, 12 hours in advance, a week in advance. If you can review them as soon as they're sent, you can provide a major role. One is to absorb them. Number two, compare them to past board meeting materials to see what's changed. Another one is if you find issues or mistakes, you can flag them for the CEO. We'll get into board member profiles in a second, but some of the best board members are the CEO's advocate, but behind the scenes, so you can identify on slide five, the numbers didn't match. Slide two, I think there's a typo. And you do that before the board member. So you're kind of setting up everyone and the board meeting and the members for success in that meeting. Obviously having well timed comments and pushing the conversation forward, not derailing it by waiting for the right time to speak makes a good board member. Bad board members are really thinking about themselves and showboating or trying to show off who they know or what they know. So it's really about them in a board meeting. And instead, the best board members are really pushing for the right answer, the best answer, the right process to get to the best answer. It's really this idea that board members, all together, including the CEO, are locking arms. They're sort of all in it together, live or die together, and really just getting down to work, right? And that's a different mindset than one is about ones self, on the left side. On the right side, it's really about the broader organization and the team. Finally, bad board members flip out. Flip out really quickly and are worried at without kind of broader context. So they may overreact, they may oversimplify, they sort of make small things too big too quickly, and I think things can become bad. But I think letting that build up and having the context to understand the size of a problem is really useful. And that's what good board members are better with. They're more empathetic to the world a CEO is working in. So that's what prevents them from oversimplifying. Knowing that a CEO has four people and that's all that they have to work with would change the way that you might suggest a solution versus having 4,000 people or having a budget. They differ dramatically. So the best board members actually dive in and help to troubleshoot the issues as opposed to just overreacting and judging. I mean, you want folks who are gonna be in the weeds with you. So I think the commonality in my mind on the right side is that a good board member realizes they're just a human, just like the CEO is just a human. And so there are things that we'll be good at, things that we'll be bad at, and we can sort of dive in with you and help wherever we can, but we don't need to be better, smarter, or weaker or less smart. It's just two people working together with regard to one board member and the CEO.
The last topic I'll touch on and to kind of conclude here is what I've seen as common profiles of board members where it works really well. As I lay these out, I would love for you to think about which one suits you. My sense is that most people naturally fall into one of these, their own style, their personality, what they love to do, what they're good at, and I think all of them can be really useful. You know, a board is, a well functioning board, is a bit like a symphony, where everyone plays a different role. You don't need two people playing the same instrument or two people playing at the same time. You actually want it to be additive and build off of each other. So on that topic, the first board member profile is a synthesizer. This is somebody who's read all the information, connected all the dots, is watching the posture of folks, is watching the reaction, has just a good empathy to them. And what they can do, I've seen this happen, in a two hour board meeting is every 20 or 30 minutes, they sort of synthesize, summarize things. They can help to conclude a conversation and move things along, but they're a little bit of the referee and the temperature taker in the room. And this works really, really well and I think every board meeting needs someone like this. On the opposite end of the spectrum is somebody who's sitting, crunching all the numbers. This is really, really valuable. It's valuable if you do it in advance of a board meeting and are able to identify trends, identify mistakes, identify holes so that the numbers and the materials can be fixed or improved by the time of the meeting. But this is a natural place for both startups and nonprofits to have somebody really analytical and detailed crunching things to make sure that everything ties and that we're making the most with what we have. Totally different profile is somebody who's listening to the problems that come up in a board meeting and thinking about who in their network can help. This is a delicate one, but if there are experts to pull in, that's always useful for a small organization. Folks who've done it before, folks who are experts here, whether that's free or paid. Another thing that all these organizations need to do is market themselves. Tell their story, position the product, position the packaging. And so very often in board meetings, there'll be one member who's very good at taglines, word choice, positioning, the right spin on things, and that can be invaluable for a CEO. Probably something I should have said earlier is one of the roles of a board member, one of the benefits of being a board member is you're not in the organization every day. Often boards come together once a month or once a quarter. So as a storyteller, you're out of it a little bit. You're out of the weeds. And that's another reason why you might be able to be effective at telling the story in a way that isn't hampered by having the day-to-day working in the weeds of the startup or organization. One of the last roles here is being a CEO coach. This is often behind the scenes work. This is often someone who's been a leader of an organization before who's on another board and they will quietly help the CEO behind the scenes, help them identify potential landmines, help them understand who on the board is happy or annoyed, help them navigate how to make the most of the organization and the board as if they were in their shoes, but do it in a very thoughtful and delicate way behind the scenes. They're not trying to be CEO, they never step up and become CEO. This is somebody who's got the CEO's back. So the very last one is someone who conducts exit interviews, someone who identifies holes in the team, someone who helps to sell candidates, thinking about compensation packages. There's an art to this world of people management and it's a big part of a CEO's role and there's usually one person on the board who's just a total expert at this and that can be valuable. So as you look at this list, there's six profiles. I hope that one or two stand out to you and become the natural way that you fall into a board. And again, this really should feel authentic. You're just a person. They're just a person. But if you do this right, you can be a really effective board member and avoid some of those pitfalls. So thank you again for attending this session on how to be an amazing board member. My name's Sunil Nagaraj. I'd love to hear from you. I'm at Sunil at Ubiquity.vc and if you have a startup that sounds like software beyond the screen, I would love to talk with you. Please set up a meeting at pitch.ubiquity.vc and thank you again.